From the desks of Stanley Katz & Lauren Madera
SALUD! IT’S NATIONAL MARGARITA DAY. DO YOU PREFER FROZEN OR ON THE ROCKS? WITH SALT OR TAJIN?
Markets snapped their losing streak this week with modest but meaningful gains: (DJIA: +0.35%, S&P 500: +1.12%, Nasdaq: +1.28%). The week’s turning point arrived Friday when the Supreme Court struck down President Trump’s sweeping tariffs, ruling that he lacked legal authority to impose them under emergency powers. The decision provided tangible relief for companies burdened by tariff costs, particularly e-commerce platforms and retailers, and eased some of the policy uncertainty that has lingered since the tariffs were announced last spring. The intraday reversal was notable: markets had initially struggled on disappointing economic data, but the tariff ruling helped recover most losses by day’s end. That said, the relief may prove temporary. The administration immediately signaled plans for a 10% global tariff using different legal authorities. Needless to say, trade policy persists as an active source of investor attention.
Beneath surface market movements, the Federal Reserve is sending distinctly mixed signals that complicate the near-term outlook. According to Schwab’s recent analysis, the Fed minutes released this week revealed “several” officials want a two-sided policy framework—meaning the possibility of either rate hikes or cuts—rather than the easing path the market started pricing in after cooler inflation data. Apparently, the central bank still struggles to agree on a consistent policy direction. What complicates this picture is an economic data environment that remains stubbornly uneven. Survey-based indicators show concerning weakness and pessimism, while actual economic performance continues running relatively resilient. This divergence suggests consumption may be slowing while business investment and productivity endures. The narrowing path for policymakers means the Fed appears likely to hold course near term rather than rush into cuts, a posture the market may not yet fully appreciate.
The investment landscape reflects another form of divergence—a sharp rotation within technology that illustrates how the AI opportunity is reshaping sector dynamics. According to Argus Research, the AI trade has become decidedly selective. Semiconductor and equipment makers are among 2026’s best performers (+35% and +21% year-to-date) while application and systems software companies are struggling (-27% and -17% year-to-date), respectively. This reversal reflects a market assessment that hardware companies enabling AI infrastructure represent longer-term value, and software companies risk disruption that can increasingly replicate their functions more cheaply. More broadly, the rotation has favored defensive, cyclical, and inflation-sensitive sectors. Energy and Materials are up 22% and 17%, coming at the expense of growth. The sector divergence is meaningful: technology as a whole is down 5% year-to-date even as semiconductors outperform. This isn’t a condemnation of tech’s future but, rather, recognition that the payoff from AI will likely be unevenly distributed.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Schwab:
Argus:
Zacks:
Putnam:
Goldman Sachs:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
937-293-5500
Source for weekly stock market returns: Barron’s.
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